The numbers are in. Based
on data collected from 60 general dental practices in the Greater Boston
area, we calculated (with the help of Microsoft Excel) that the number of
individual patients treated by an office in a calendar year is a 79%
predictor of that practice's gross collections.
Just to be clear, this metric is
not based on the total number of patient visits during the year. Instead, this
metric compares the gross revenue of the practice with the number of unique individuals who
were treated at least one time by that practice over a twelve-month period of
Below is a graph of our 2013 data
with the x-axis showing the number of unique patients treated during the year
and the y-axis showing gross annual collections.
Please note how closely most data points hug the trend line.
Individual Patients Treated in 2013 vs Annual Collections:
Gathering the Data:
Depending on the practice
management software used, determining how many individual patients were treated
by an office sounds easier than it actually is.
For Patterson's Eaglesoft,
simply generate the Patients Analysis Report, and the number of patients
treated during the prior 12 months is printed on top of the second column.
For Schein's Dentrix, the Practice Statistics Report
displays the total number
of patients in the system who are not marked as inactive. Same holds
true for EZ Dental's Practice Demographics report. The Dentrix FAQS
suggest to use the mailing list function to figure out the number of
individual patients treated during the prior year.
Office Manager, select Letters, Misc, Patient Report by Filters, and Edit.
All filters should be empty. Then click on the Procedures filter, click
Completed on top in the Search For field, and put the dates 1/1/13-12/31/13.
Create the Data File only, then View List, and copy that list to Excel and
see how many rows there are on the spreadsheet.)
For the increasingly
popular Open Dental, go to the Report FAQS, and you should be able to easily
locate the 3 or 4 lines of code to put in the Custom Report generator. Just
be sure to fix the dates before hitting the Create Report button.
Now that we know that the
number of unique patients treated each year at your office is a 79% predictor of your practice
revenue, here are some steps you can take to maximize collections:
Keep your current
patients happy. It's usually easier to keep a patient coming back
than to replace patients that left your practice due to a poor experience.
Bring in new patients.
This is easier said than done in most cases, but find ways to
generate referrals from your existing patient base and/or commit to a proven method of
advertising that works for you.
Try to Reactivate patients who
haven't been to your office during the past year but have come in for treatment
within the prior 2-3 years.
Consider using a
program such as Smile Reminders, Lighthouse 360, RevenueWell, or Demand
Force to keep your patients more engaged and informed.
Institute a Simplified
Incentive Bonus System to reward your staff for growing the number of patients
treated in the office over the calendar year. (Check out our great video on
And if you'd like to set up a time
for me to help you figure out these ten metrics for your practice, please do not hesitate to
e-mail me that request. We'd really
appreciate the opportunity to help you gain some insight on the performance
metrics for your practice.
The Internal Revenue Service today announced the spring 2014 issue of the
Statistics of Income Bulletin is now available, featuring information on
high-income individual income tax returns filed for tax year 2011.
almost 5 million returns with adjusted gross incomes of $200,000 or more for
2011, up over 9 percent from the prior year. These high-income returns represent
about 3 percent of all returns filed for the tax year.
of Income (SOI) Division produces the SOI Bulletin on a quarterly basis.
Articles included in the publication provide the most recent data available from
various tax and information returns filed by U.S. taxpayers. This issue of the
SOI Bulletin also includes articles on the following topics:
Income Tax Rates and Shares, 2011: Of the 145 million individual tax
returns filed in tax year 2011, almost 92 million were classified as taxable
returns or returns with a total income tax greater than $0. Adjusted gross
income (AGI) for taxable returns was nearly $7.7 trillion, up 6 percent from
the prior year. Total income tax was more than $1 trillion. To be included
in the top 1 percent of returns for 2011 required an AGI of $388,905.
Noncash Contributions, 2011: For tax year 2011, there were more than 22
million individual taxpayers who reported a total of $43.6 billion in
deductions for noncash charitable contributions. About a third (7.5 million)
of these taxpayers reported nearly $39 billion in deductions for charitable
contributions of $500 or more.
Foreign-Earned Income and Foreign Tax Credit, 2011: Nearly 450,000 U.S.
taxpayers reported $54 billion of foreign-earned income for tax year 2011.
This represented growth in real terms of over 32 percent since the last
study in 2006.
of Income Bulletin is available for download at
Printed copies of the Statistics of Income Bulletin are available from the
Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954,
Pittsburgh, PA 15250-7954. The annual subscription rate is $67 ($93.80 foreign);
single issues cost $44 ($61.60 foreign).
season, I have several clients that I meet with who excitedly inform me that
they have finally purchased a new home. And often times, the next bit of
information they communicate to me is that the new house has a home office.
However, having a room in the house to do work in versus using a dedicated
area of the home that qualifies as a deductible home office are often two
In order to
meet the rules as a qualifying home office resulting in a business deduction on
your personal tax return, the home office space must be a separate section of
your home used regularly and exclusively
connection with a trade or business. The qualifying space typically would be a
separate and identifiable room within your home. However, the qualifying space
could also be a section of a room, whether visibly partitioned off from the
remainder of the room or not, as long as it is clearly distinguishable as being
set aside for business purposes. A common example of this setup would be a
radiologist performing teleradiology services for a hospital in the
corner of a second bedroom.
Once you have
determined that you have a qualifying space set aside for the home office, the
next two criteria are key to satisfy the home office rules: regular and
exclusive use. The space must be used on a regular basis. This does
not necessarily mean that the office must be used daily, but it should be used
on a continual basis throughout the year (or period claimed as a home office).
Occasional and infrequent use of the room would not meet the home office
qualification. The second qualification, exclusivity, requires that the space
be used exclusively for business and not for personal purposes. If the space is
mixed use, both personal and business, then this portion of your home would not
qualify as a home office. Placing your laptop on the family room coffee table
to do patient billings while watching TV would certainly not meet any home
office rules, even though your primary intent, billing patients while working at
home, is connected to your business.
above, the use of the home office must be in connection with your trade or
business. Additionally, having a second or multiple business locations to see
patients or customers does not disqualify the deduction for your home office.
You may be a dentist with two office locations, one being in the basement of
your residence and the other being in a neighboring town. Having the second
location does not disqualify the home office deduction. Being connected with
your trade or business extends to administrative work as well. Using your home
office to do your patient scheduling and billing, and to maintain your
accounting and recordkeeping also qualifies the home office for business use –
even if you see no patients at your home office but have office visits at
another location such as the hospital of clinic.
there are two ways to determine the dollar amount of your home office
deduction. Taxpayers can either
percentage of their true costs or they can use the new
Simplified Home Office Deduction Method. Using the percentage of actual
cost method, the taxpayer would determine the deduction by dividing the square
foot area of the home office by the total square foot space of the entire home.
The home office deduction is calculated by totaling indirect home expenses such
as mortgage interest (or rent if the home is not owned), real estate taxes,
homeowners insurance, utilities and maintenance costs multiplied by the
calculated square foot percentage. Additionally, the home office calculation
may include direct expenses as well as a deduction for tax depreciation
(amortizing the original cost of your home over a period of years).
in 2013, the IRS allows taxpayers to use the Simplified Home Office Deduction
Method. Electing this second method, taxpayers determine their deduction based
upon $5 per square foot of home office space, not to exceed 300 square feet, or
a $1,500 total deduction. This new method certainly simplifies the calculation
of the deduction and the recordkeeping required, but typically will result in a
lower deduction for taxpayers. Using either method, taxpayers may also
qualified for multiple home offices in the same home if separate home office
spaces exist and both qualify. Examples would be each spouse utilizing separate
home office spaces or if separate spaces exist for separate businesses.
qualification to be aware of if you are an employee is that the home office
must be for the convenience of the employer. Employees that do work in their “home office” late at night or
during the weekend, will not qualify for a home office deduction if they also
have a place to do this work at the employer’s office, but choose to do the work
at home rather than at their employer’s office. If you are a self-employed
individual taking the deduction, you have more flexibility with meeting the
rules when another job site exists in addition to your home office.
When you sell
your house, be aware there could be tax consequences related to a sale when you
have had a home office deduction claimed on your previous years’ tax returns.
Although the home office that is included within the dwelling of your home will
fall under the capital gain home exclusion rules, any depreciation expenses
relating to the prior years’ home office deductions, whether actually taken on
previous years’ tax returns or not, would be included as income and taxed
federally at a 25% tax rate, and taxed at the state level as well when the home
is sold. One final note, if the home office is a separate dwelling unit from
the home such as a converted barn or detached garage, additional taxes from the
home sale could exist as well in addition to any depreciation being recaptured
as income. And anyone using the Simplified Method has no depreciation to
think the IRS won’t question the validity of such a deduction if you are ever
audited. Keeping good receipts as well as taking a picture of the home office
space and keeping it with your tax records will go a long way in substantiating
and qualifying your home office deduction, and in giving you peace of mind as
well. If you meet the rules, claim the deduction. The tax benefits relating to
a qualified home office deduction on your tax return could be substantial,
depending upon the size of the space, percentage of use and the resulting dollar
value of the deduction claimed. In addition to federal and state taxes saved
resulting from the home office deduction, if you are self-employed the tax
savings will also include self-employment taxes. Thus, if you meet the rules,
this deduction is one not to be missed.
About the Author
Richard S Schwartz, C.P.A., C.V.A.,
received a B.A. in Economics from Brandeis University in
1985 and an M.S. in Accounting from the Graduate School of
Professional Accounting at Northeastern University in 1990.
Prior to joining his brother Andrew at Schwartz and
Schwartz, P.C. in 1993, he worked for the international
accounting firm PricewaterhouseCoopers, LLP, in their
Emerging Business Services Group. Since joining Schwartz and
Schwartz, P.C. he has worked with individuals providing tax
expertise as well as small business owners providing both
tax and accounting guidance to help their businesses grow.
In 2006, Rick earned the designation of Certified Valuation
Analyst from the National Association of Certified Valuation
For 2013, the standard deduction for a single individual is $6,100 and
for a married couple is $12,200. A person will benefit by itemizing once
allowable deductions exceed the applicable standard deduction. Itemized
deductions include state and local income taxes (or sales taxes), real estate
taxes, mortgage interest, charitable contributions, and unreimbursed employee
For 2013, the personal exemption is $3,900.
Individuals will claim a personal deduction for themselves, their spouse, and
The maximum earnings subject tosocial security taxes is $117,000
for 2014, up from $113,700 in 2013.
The standard mileage rateis $.56 per business mile as of
January 1, 2014, down from $.565 for 2013.
The maximum annual salary deferral into a 401(k) plan or a
403(b) plan is $17,500 in 2013 and 2014. And if
you'll be 50 or older by December 31st, you can contribute an extra $5,500 into
your 401(k) or 403(b) account that year.
The maximum annual contribution to your IRA is $5,500 for
2013 and 2014. And if you turn 50 by December 31st,
you can contribute an extra $1,000 that year. You have until April 15,
2015 to make your 2014 IRA contributions.
In a shocking development, the
IRS recently announced that they will be honoring the FICA tax refunds
submitted by residency programs and individual doctors. The catch is
that only FICA taxes paid prior to 4/1/05 qualify.